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Respondent contends that petitioner's 55-cent-per-package
commission rate16 was not negotiated at arm's length given that it
did not even cover petitioner's fixed costs. Respondent contends
that the Canelos group agreed to an unprofitable commission rate
for petitioner because they believed petitioner's losses would be
offset by earnings from the SCP deal of other members of the
Canelos organization.
Petitioner counters that, although Mr. Canelos was aware
generally of the commission rate that petitioner would need to
break even, he reasonably believed, on the basis of Dole's
projections and the representations it would promote the Canelos
growers' produce and increase sales, that petitioner could make a
profit under the SCP deal. Petitioner contends that had volume
increased as Dole projected, petitioner's losses would have been
eliminated.
16Petitioner asserts that the 55-cent-per-package commission
rate converts to a rate of 6.6 percent of sales using a weighted
average package price of $8.31 per package over the years 1989
through 1992. Petitioner asserts further that the per-package
rate would convert to a rate of 7.4 percent of sales if the
unusually high 1990 prices were ignored. Respondent disputes the
accuracy of petitioner's percentage-of-sales calculations because
the amounts are calculated on total Canelos growers' proceeds,
not proceeds relating to sales made by petitioner. Respondent
does not indicate what the percentage-of-sales calculations would
be on the basis of corrected sales data. The precise percentage
rate to which the 55-cent-per-package rate would equate is not in
issue in the instant cases. All we need know is that the 55-cent
rate is substantially less than the 10-percent rate that was paid
by the otros growers.
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